Article by Sunil Kardam, Consulting & Analytics Leader at Gramener-A Straive Company
The three-day dockworkers’ strike a couple of months ago sent shockwaves throughout the US trade industry, costing the country’s economy $5 billion a day. Although the dust has settled since then, this event serves as a grave business lesson on the importance of supply chain resilience.
Experts predict disruptions are only going to be a more common thorn in business owners’ sides as crises like geopolitical turbulence, climate catastrophes, and cyberattacks continue to increase.
Yet, surprisingly, businesses are losing momentum in revolutionizing supply chains to be stronger and more agile. The fact that companies are slow to create advanced planning and scheduling systems is extremely concerning given the exponential risk of disruptions and threats.
It’s crucial for business leaders to not drop the ball and revamp efforts to strengthen their supply chain resilience. Let’s dive into how they can achieve this through proper risk management and digitalization.
Out of Sight Shouldn’t Mean Out of Mind
Risk management must involve careful foresight for contingency plans when, not if, a disruption occurs.
In fact, there’s a whole zoo of risks experts have coined in the past couple of decades to really illustrate the scenarios of these impending issues. Concepts like the gray rhino, black swan, and white elephant can help business leaders plan risk management strategies for various scenarios that disrupt supply chains and operations.
Global political unrest is the main culprit for disruptions. Moreover, Deloitte points to geopolitical turbulence as a huge disruptor to delivery and lead times: their insights show that the average lead time on producing materials is around 79 days, versus 65 in 2019. This isn’t just a major problem for manufacturers—it threatens business continuity for companies across the value chain. And with ongoing geopolitical instability, like the ongoing wars in the Middle East and Ukraine, businesses should be preparing for the high probability of continued disruptions to lead times and shipments.
Another risk business leaders have to increase resilience against is cyberattacks. Worryingly, cybercrime is only on the rise, and resulting financial losses have hit a record high of $12.5 billion. No company is immune to this threat, and Gartner predicts that by next year, 45% of companies worldwide will have experienced a cyberattack on their software supply chain—triple the amount in 2021.
Finally, the ongoing climate crisis is something we can’t continue to ignore. Environmental risks are forecast to cost companies a collective $120 billion by 2026—by the mid-century they’re expected to lead to a whopping $25 trillion in supply chain net losses. To illustrate the ramifications of climate on supply chains, the devastating impact of Hurricane Milton in Florida brought trade via shipping ports to a screeching halt, impacting over 900,000 jobs.
The catastrophic consequences of these top supply chain disruptions are undeniable and are constantly present on the horizon as threats to businesses and manufacturers alike. Without a solid game plan for managing these risks, they’ll continue wreaking havoc on livelihoods and companies’ viability.
Listen to the Data
Emerging technologies like AI are critical enablers for future-proofing supply chains, and end-to-end visibility is critical for maximizing agility and resilience. Real-time data sharing is proving pivotal to proactive risk management so that businesses can act swiftly to address disruptions as they arise.
At the heart of the digitalization revolution is actionable analytics. They’re transforming business reporting and KPI monitoring to help leaders identify bottlenecks, track performance, and forecast demand, making sense of their data with ease.
Supply chains are only becoming more complex, and business leaders have to be able to act on those real-time insights to weather the storms as they come. Additionally, continuous improvement to risk management strategies should be a non-negotiable for future planning, and KPIs from these valuable insights will empower businesses to continue raising their benchmarks for the performance of their operations.
However, the challenge lies in accessing this data. Fortunately, there are a number of emerging solutions which are helping companies digitally transform their supply chains.
Harnessing Emerging Solutions
According to a recent global survey from McKinsey, 65% of organizations are regularly using generative AI (GenAI). For supply chain management, GenAI is an extremely valuable tool, helping businesses extract actionable insights from both structured data (like databases and spreadsheets) and unstructured sources (such as emails, videos, and documents). This technology is helping simplify decision-making by providing digestible summaries from data sources so that business leaders can focus on strategic actions without the headache of sifting through huge volumes of information.
Another rising star is computer vision, which is helping companies enhance their quality control by automatically detecting defections and monitoring workforce performance. The business benefits from computer vision are multifold: they can use it to improve safety, reduce waste, and maintain high standards in production and handling processes. This solution also helps organizations strengthen visibility across their supply chains due to the real-time sharing capabilities of computer vision.
Lastly, digital twin technology is another tool businesses should consider leveraging to strengthen operations and supply chain management. Combined with the Industrial Internet of Things (IIOT) capabilities, digital twin technology offers virtual models of physical assets like machinery so companies can achieve predictive maintenance and minimize downtime. By preempting issues before they impact operations, digital twins support continuous productivity, allowing companies to respond swiftly to fluctuations in demand or unforeseen interruptions.
Achieving supply chain resilience won’t happen overnight, but technology and data are definitely helping business leaders get back on track before it’s too little too late. While the road ahead won’t be smooth, having the right action plan in place is going to help companies overcome hurdles as they arise.
